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Take Your Position: Amazon

With Oppenheimer raising Amazon to ‘Outperform’ from ‘Perform’, what should you expect when the e-tail darling reports earnings, Thursday?

Shares of Amazon slipped modestly on Wednesday one day ahead of earnings. That move comes despite word from Oppenheimer analyst Brian Nagel that "upside surprises to sales/earnings per share estimates should drive the shares near term."

He added that the slowdown in sales that began at the company in 2008 had bottomed out and started to reverse in the second quarter of this year and he lifted Amazon’s outlook to ‘Outperform’ from ‘Perform.’

Meanwhile, Brigantine Advisors analyst Colin Gillis predicted "solid" quarterly results, saying the company may beat his earnings estimate of 31 cents per share.

However, he cautioned that consumers' growing interest in nonphysical products — such as digital downloads of movies and music — puts Amazon in a vulnerable position, and he'll be keeping an eye out to see if the company's media segment sees sequential growth for the first time this year.

It’s also worth noting that Amazon may be in the throws of a price war.

Amazon cut the price of the Kindle to $259 partly as a preemptive move to compete with a rival gadget from Barnes & Noble , which also sells for $259.

In addition, Amazon is locking horns with Walmart and Target – both slashed the price of 10 upcoming best-sellers on their respective websites to $8.99 in an attempt to win some marketshare.

What’s the trade?


I think Amazon is the online Walmart, muses Joe Terranova. I expect to see aggressive strategies lead to top line growth. The stock could go north of $100.

I think Amazon is set up to not go higher, counters Mad Money host Jim Cramer on Fast Money. The stock is more expensive than Apple. I'd wait for the bears to come in and hammer Amazon below $90.

What do you think? We want to know!

> Click here for Karen Finerman’s Barnes & Noble trade



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Trader disclosure: On October 21st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (DIG), (MSFT), (AAPL), (BAC), (EWZ), (INTC); Najarian Owns (DE) Call Spread; Najarian Owns (STX) Call Spread; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO), (YHOO) Puts; Terranova Owns December Crude Oil Futures

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